At first glance January stats look troubling; new listings (-11.5%), pending sales (-16%), and closed sales (-12.8%) all showed a marked decline. Rest assured, it’s not time to panic. In fact, the cause of these negative numbers is a positive aspect and one I have consistently written about (excuse me for sounding like a broken record). The cause is the decline of lender mediated properties for sale. As a whole these negative numbers reflect fewer transactions relative to last January. In fact, lender mediated listings declined about 50%! Concurrently, traditional listings have rallied, increasing 7.9% over January 2013. This shift in listings has resulted in some very positive statistics, days on market have declined 12.4% and the median sales price increased 12.4% to $179,900.
In many ways we are picking up where we left off in 2013. Low listing inventory is a serious issue with a current 2.7 month’s supply of homes for sale. That is a -15.6% decline over January 2013. Low listing supply has helped many sellers get their homes sold on favorable terms, but has presented a challenge for buyers. However, this hasn’t slowed down the buyer demand because rates remain very attractive and prices are still below peak levels. In addition, new construction has and will continue to ramp up as that industry makes up for the dearth of new construction in recent years. My hope is that new construction, combined with increased seller confidence will help satisfy buyer demand and balance the residential real estate market.
It’s hard to not be bullish about the residential real estate market in the Twin Cities as 2014 unfolds. Things to keep an eye on in the first quarter of 2014 are mortgage rates, listing inventory and job growth.